As people progress through different life-cycle stages and their family structures and financial situations change, so do their housing needs and preferences. An understanding of the relationships between life-cycle stage, income, housing costs and level of investment in home ownership can be useful in developing policies which enable home purchase among those who would otherwise find this difficult.

There are long-term benefits in home ownership. Initially, the cost of home purchase is often far greater than renting (due to the costs of deposits and fees, as well as ongoing mortgage repayments). However, the much lower costs associated with owning a home outright, and the investment that a home represents, can be major factors in the ongoing economic wellbeing of many Australians, particularly as many retire on considerably reduced incomes.

In the 2000-01 Survey of Income and Housing Costs, ongoing housing costs comprised:

mortgage or loan repayments (secured or unsecured) where the purpose of the loan was to buy or build, add to or alter the dwelling

rental payments

water and general council rates.

Only payments which related to the dwelling occupied at the time of the survey interview were included.

The survey estimated that the average weekly housing costs for all households were $123. Outright owners (those without a mortgage) had the lowest average weekly housing costs ($23), while those with a mortgage had the highest costs, spending an average of $220 per week. On average, those households that were renting paid $150 per week in housing costs (table 8.7).

Most Australian households live in separate houses (78% in 2000-01). However, as with tenure, the type and size of dwellings and housing costs vary across different life-cycle groups.

The life-cycle groups whose housing circumstances are discussed in this section include:

Dependent children are children aged under 15 years plus full-time students aged 15-24 years living with a parent and without a partner or child of their own in the household.

Thereference person for each household is chosen by applying, to all usual residents aged 15 years and over in the household, the selection criteria below, in order of precedence:

the person with the highest tenure type ranked from owner without a mortgage, owner with a mortgage, renter, other tenure, or

the person with the highest income, or

the oldest person.

In 2000-01, 70% of Australian households owned their homes (table 8.6). The tenure of a household is strongly related to life-cycle stages, generally following a pattern of renting in early adulthood, moving to home purchase and mortgages as partnerships are formed and children are born, and owning the home outright in older age. However for some, family breakdown disrupts this pattern.

Between 1994-95 and 2000-01, the home ownership rates of various life-cycle groups showed little change. However, there were exceptions. For young households, both lone person and couples without children, the rate fell (33% to 29% and 61% to 58% respectively). For older (aged 65 and over) lone-person households, the rate increased from 71% to 76% (graph 8.10).

Young households (under 35 years)

In 2000-01, young lone-person and couple-only households (those with a reference person aged under 35 years), comprised about 10% of all households in Australia (each group around 5%). People in these households are generally more mobile. Many are studying or starting their careers, and are likely to be on lower incomes than they will be at later stages in their lives. In many cases, they are yet to move into home ownership.

Young lone-person households were most likely of all life-cycle groups to be renting (66%), with most of these (92%) renting from private landlords (table 8.11). Less than one-third of young lone-person households had moved into home ownership, and most that had, did so with a mortgage. However, young people are more inclined to move into home ownership as they form couples. Just over half of young couple households without children owned their own home. As was the case for young lone-person households, most of these couples had a mortgage.

In keeping with their larger household size, young couples without children lived in dwellings where the average number of bedrooms was higher than for young lone persons (2.7 compared with 2.1). Young couple households without children were also more likely than young lone-person households to live in separate dwellings (65% compared with 33%), with the majority of young singles living in semi-detached dwellings or flats.

Reflecting their lower household incomes, young lone persons spent on average over a fifth (23%) of their income on housing. Young couple households without children (many of whom are on dual incomes) on average spent a lower proportion of their income on housing costs (18%) than young lone-person households, despite the fact that they had much higher average weekly housing costs ($234 compared to $150).

8.11 YOUNG PEOPLE, Selected characteristics - 2000-01

Household composition

Units

Lone person aged
under 35 years

Couple only, reference person
aged under 35 years

Tenure type

Owner without a mortgage

%

6.9

6.9

Owner with a mortgage

%

22.6

50.9

Renters

%

66.0

39.4

Average housing costs as a proportion of income

Owner without a mortgage

%

*3

**5

Owner with a mortgage

%

28

20

Renters

%

25

17

All households

%

23

18

Proportion of income spent on housing costs

25% or less

%

51.7

74.5

More than 50%(a)

%

13.8

*4.6

Proportion in a separate house

%

33.3

64.9

Average weekly housing costs

Owner without a mortgage

$

18

**52

Owner with a mortgage

$

257

297

Renters

$

137

201

All households

$

150

234

Average bedrooms in dwelling

no.

2.1

2.7

Total households

'000

331.5

374.3

(a) Involves households with nil or negative total income.

Source: ABS data available on request, Survey of Income and Housing Costs, 2000-01.

Families with children

As families are formed and grow, housing needs and preferences change. The birth of children increases family size and often results in the household shifting back to dependence on a single income when children are very young. The trend to home purchase and moving into larger dwellings increases as couples and their children grow older. At this time, parents’ incomes are likely to be higher than those in younger life-cycle groups due to their more established careers and the move of parents (mainly mothers) back into the workforce and full-time employment.

Of couple families with all children aged under 5 years, 68% were home owners (59% were paying off a mortgage) (table 8.12). Among households containing couple families with older children (at least one aged 15 years or over), home ownership was higher (90%) than for those with younger children and over a third (37%) owned their home outright.

Income levels vary considerably over a person’s life cycle. Household incomes for couples, and hence their capacity to pay for larger, more expensive homes, usually increase as their children grow older. In 2000-01, most couple households with young children lived in separate houses and in homes with three or more bedrooms (87% and 85% respectively). However, couple households with older dependent children were even more likely to do so (96% and 98% respectively). Despite this, housing costs for couple households with young children were generally higher ($200 on average per week, representing 17% of their average weekly income) than for couples with older children ($141 which constituted 9% of their weekly income). This is likely to reflect the fact that couple households with young children usually have less equity in their homes than couples with older children. The former households are also more likely to have bought their home more recently and therefore to have purchased their house at a higher price.

For those who owned a house, average weekly housing costs for couples with young children ranged from $255 for those with a mortgage to $26 for those without a mortgage. For couples with older children, average weekly housing costs ranged from $211 for those with a mortgage to $28 for those without a mortgage. In contrast, households containing couple families which were renting had similar costs regardless of the age of children present.

When families are disrupted through divorce or separation, the trend towards home ownership is often reversed, reflecting reduced household incomes and the splitting of family assets. As a result, the household may move from home ownership back to renting, and also into a smaller, more affordable home. Lone-parent households with dependent children were more likely to be renting (59%) than to own their home (40%), and they were the life-cycle group most likely to be renting through a state or territory housing authority (16%). In 2000-01, while most lone-parent households with dependent children lived in separate dwellings (77%) and in dwellings with at least three bedrooms (83%), these proportions were lower than for couples with dependent children.

Average weekly housing costs for lone-parent households with dependent children were $131, or 20% of their average weekly income. Among these households, private renters paid $165, on average, in housing costs which represented 27% of average weekly income. Lone-parent households with dependent children were more than three times as likely as couple households with at least one dependent child aged 15 years or over to spend more than 25% of their income on housing (41% compared with 12%). Just 8% of lone-parent households with dependent children spent more than 50% of their income on housing.

8.12 FAMILIES WITH CHILDREN, Selected characteristics - 2000-01

Household composition

Units

Couple with
eldest child
aged under 5 years

Couple with at least
one dependent child
aged 15 years or over

Lone parent
with dependent children

Tenure type

Owner without a mortgage

%

8.9

36.8

13.8

Owner with a mortgage

%

59.4

53.6

26.5

Renters

%

30.0

8.7

58.5

Average housing costs as a proportion of income

Owner without a mortgage

%

*2

2

*4

Owner with a mortgage

%

21

12

22

Renters

%

15

*16

25

All households

%

17

9

20

Proportion of income spent on housing costs

25% or less

%

68.6

89.5

58.7

More than 50%(a)

%

5.1

*1.6

8.0

Proportion in a separate house

%

87.1

95.5

77.2

Average weekly housing costs

Owner without a mortgage

$

26

28

26

Owner with a mortgage

$

255

211

179

Renters

$

155

196

137

All households

$

200

141

131

Average persons in household

no.

3.4

4.4

3.0

Average bedrooms in dwelling

no.

3.1

3.7

3.0

Total households

'000

415.1

661.4

541.8

(a) Involves households with nil or negative total income.

Source: ABS data available on request, Survey of Income and Housing Costs, 2000-01.

Older persons (65 years and over)

Home ownership is very high among older people, with outright ownership by far the most common tenure type for Australians aged 65 years and over. The benefits of this to older people include lower housing costs, security of tenure, and having an asset that may be realised for future expenditure or passed on to later generations as inheritance.

In 2000-01, older persons living in a couple only household (those where the reference person was aged 65 years or over) had very high ownership rates (92%), with 89% owning their home outright. Older lone-person households (which are often formed when a partner dies) had a home ownership rate of 77%, with 74% owning their home outright. Older lone-person households were more likely to be renting than older couple only households (19% compared with 6%), with 9% of older people living alone renting from state or territory housing authorities.

In 2000-01, the average weekly income of older person households was lower than for any other life-cycle group (reflecting the likelihood that household members had retired). However, average weekly housing costs for this group were also lower than for other life-cycle groups ($23 for couple households and $26 for lone-person households). Even for those older person households with a mortgage, average weekly housing costs were relatively low ($55 for older couple households and $46 for older lone-person households) (table 8.13). This partly reflects the fact that many of these households purchased their first home some decades earlier when home prices and mortgages were considerably lower. However, for the small proportion who were renting, housing payments consumed a relatively large proportion of their incomes. The 7% of older lone-person households that were renting from private landlords spent a very high proportion of their income (36%) on housing costs.

Reflecting their smaller household size, the homes of older lone-persons were more likely to be smaller than those of older couples. Older lone-persons were less likely to live in separate dwellings than older couples (64% compared with 88%), and more likely to be living in dwellings with fewer bedrooms than older couples (2.4 bedrooms on average compared with 3.0).

For many older people, the onset of diminished health and disabilities, and the need for security and ready access to services such as public transport, are often key considerations in their choice of housing, especially after the death of a partner. The growing proportion of older persons (in particular of persons aged 80 years and over) in Australia has led to the emergence of new types of housing such as self-care dwellings in retirement villages. Results from the 2001 census show there were 62,570 occupied dwellings of this type.

8.13 OLDER PEOPLE, Selected characteristics - 2000-01

Household composition

Units

Couple only, reference
person aged 65 years or over

Lone person aged
65 years or over

Tenure type

Owner without a mortgage

%

88.5

73.7

Owner with a mortgage

%

*3.3

2.8

Renters

%

5.9

19.0

Average housing costs as a proportion of income

Owner without a mortgage

%

4

6

Owner with a mortgage

%

*11

*19

Renters

%

22

28

All households

%

5

9

Proportion of income spent on housing costs

25% or less

%

97.5

89.7

More than 50%(a)

%

*1.1

*2.0

Proportion in a separate house

%

88.0

64.1

Average weekly housing costs

Owner without a mortgage

$

19

16

Owner with a mortgage

$

55

*46

Renters

$

88

66

All households

$

23

26

Average bedrooms in dwelling

no.

3.0

2.4

Total households

'000

569.9

694.6

(a) Involves households with nil or negative total income.

Source: ABS data available on request, Survey of Income and Housing Costs, 2000-01.